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Last Updated: Thursday, 16 June, 2005, 16:26 GMT 17:26 UK
Kremlin agrees price for Gazprom
Gazprom's Moscow HQ
The Kremlin had initially planned to merge Gazprom with Rosneft
The Russian government is set to gain majority control of gas giant Gazprom after agreeing to buy an extra 10.7% stake for 203.5bn roubles ($7bn; 4bn).

The Kremlin plans to raise the money by floating a minority share in state-owned oil firm Rosneft.

It hopes to secure its majority stake in Gazprom by 24 June.

The deal should mean the government is moving closer to allowing the remaining shares in Gazprom to be traded freely. Foreigners currently cannot buy them.

Good price?

The $7bn Moscow paid for the 10.7% stake in Gazprom is less than expected.

Investment banks Morgan Stanley and Dresdner Kleinwort had valued the stake at $8.4bn and $11.5bn respectively.

The Russian government had previously planned to merge Gazprom with Rosneft, but this idea was scrapped.

Analysts said managers at both firms had strongly resisted the merger, forcing a major government rethink.

The merger ran into difficulties after Rosneft controversially acquired Yuganskneftegas, the oil production unit of former leading oil producer Yukos.


SEE ALSO:
Russia to buy control of Gazprom
17 May 05 |  Business
Russia moves on gas giant merger
14 Mar 05 |  Business
Managers' row hits Russian merger
03 Mar 05 |  Business
Ex-Yukos unit left out of merger
02 Mar 05 |  Business
Putin backs Gazprom shares deal
14 Sep 04 |  Business


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